This blog is devoted to evaluating vulnerable Democratic candidates, political news, law and current affairs. Author is a Political consultant specializing in opposition research for conservative candidates, attorneys and PACS at the local, state, and federal level.
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― Patrick Henry

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Saturday, May 12, 2012

The Lovitz Curve: The hypocrisy of West Coast Liberals

First popularized in the ’70s and ’80s, the Laffer Curve was a brilliantly simple economic graph which demonstrated that government revenue grows as taxes are increased only up to a certain point, after which revenues begin to decline as tax rates approach 100%. (See idealized Laffer Curve on the right; click to enlarge.) The high point on the curve shows the optimal tax rate for bringing in the most revenue.

The reasoning behind this is self-evident. Obviously if tax rates are
0%, then the government will collect no tax revenue; but if tax rates
are 100%, then the government will almost certainly also
collect no tax revenue, because there would be no motivation for anyone
to work, earn or invest, since all their income would go directly to the
government. A tax rate of 100% may sound tempting at first, but since
it would precipitate an economic collapse, the end result would be no
economic activity to tax, and thus no revenue. Therefore, the most
effective tax rate is somewhere in the middle; the trick is determining
exactly where.

Keep the Laffer Curve in mind as we turn our attention to the
astounding recent political transformation of comedian Jon Lovitz. On
April 23, a recording of a Lovitz comedy routine savagely criticizing Obama’s “bullsh*t” class warfare rhetoric went viral on the Internet, and before long Lovitz was cropping up everywhere,
in great demand as the spokesman for everyone disgusted by Obama’s
claims that high earners “don’t pay their fair share” in taxes. And this
is coming from a self-described Democrat who voted for Obama.

Most significantly, Lovitz claims that many of his fellow Hollywood liberals agree with him but are too afraid too say it publicly.

And then it struck me. Wealthy Hollywood liberals just love
to skewer evil corporate fat cats and country-club Republicans, and up
until now no one had encountered a limit to their enthusiasm for leftist
class warfare rhetoric. And then…Obama went too far, and suddenly it got personal.

I realized that the principles behind the Laffer Curve also
apply to the economic and political relationship between Democratic
politicians and the Hollywood elite. Wealthy West Coast liberals will
cheer on and swoon over any politician who engages in overheated class
warfare rhetoric — up until a certain point, when it suddenly dawns on
them that the rhetoric is aimed directly at themselves. Then very
quickly their donations, fundraisers and helpful propagandizing start to
dry up as the radical rhetoric begins to threaten them personally.

Just as in a Laffer Curve, Revenue and Support from Hollywood
(RASH) is at a minimum for any politician who (like President Reagan,
for example) doesn’t engage in talk of class warfare and refuses to
demonize the rich; but it would also be at a minimum for any politician
who’s so extreme (like Lenin, for example) that he’s likely to forcibly
confiscate all the money and mansions of the wealthy Hollywood
hypocrites. Somewhere in the middle, there is a perfect “sweet spot” for
class warfare rhetoric that ensures maximum RASH – strong enough
rhetoric to demonstrate your liberalism, but not so strong as to go “the
full Vladimir.”

All this can be explained more clearly in a new graph. And so I hereby present: The Lovitz Curve:

Just as in the Laffer Curve illustration above, this is an idealized,
symmetrical version of what the Lovitz Curve would look like. Yet
progressive critics of the Laffer Curve claim that the point of optimal revenue
is likely not at the exact middle (e.g. a 50% tax rate in that case),
but most probably further off to the right of the graph, somewhere
around the 70% mark. (On the right you can see what critics say a more accurate Laffer Curve would look like — click to enlarge.)

The same principle holds true for the Lovitz Curve. Hollywood
liberals are much more enthused by and generous to politicians closer to
the Lenin end of the scale than to anyone near the Reagan end of the
scale. It’s not like they’re most enthused by perfectly centrist
populists; instead, they tend to give RASH to fairly high levels of
class warfare, just so long as it doesn’t get so high that it starts to become scary.
Thus, a more accurate Lovitz Curve would likely look something like this:
Socialists absolutely hate the Laffer Curve because it takes
as its starting point the assumption that under real-world conditions a
completely collectivist economy (in which there is no personal reward
for working) will always stagnate to the point of complete paralysis.
Unfortunately for the haters, the history of communist economies largely
confirms Laffer’s assumption; one only need look at what happened in
the Soviet Union in the ’20s and ’30s, and China in the ’50s, to see
that productivity collapses and the economy implodes when you outlaw
individual rewards for labor (which is what a 100% tax rate would do).
Similarly, the Lovitz Curve is going to be a rude awakening for the
Obama campaign. He and his strategists had thought that they could amp
up the class warfare rhetoric to the absolute maximum and still count on
unquestioned support and unlimited donations from the Hollywood elite.
But Jon Lovitz’s game-changing rant brought them crashing down to Earth;
turns out that the wealthy liberals have acquired a taste for luxury,
and their guilt-assuaging support for the proletariat has a limit. Obama
unwittingly crossed that line, and he learned the hard way that the
curve’s drop-off in RASH is steep and pitiless as you approach
Leninhood.
And what holds true for the Hollywood elite almost certainly holds
true for hypocritical wealthy liberals from San Francisco to the
Hamptons. The Obama campaign may begin to see those big liberal donors
suddenly making themselves scarce if he keeps demonizing the 1%.
Will Obama heed the harsh realpolitik of the Lovitz Curve? Or will he throw caution to the wind as he tries to whip up the underclass into a scapegoating frenzy?

Quotes

"If it's smart to look at the Carfax history of a used car before buying it, why should anyone object to discovering the history of politicians before electing them to serve you?" Stephen Marks

"I believe that public office is the noblest of professions, but I also believe we must hold public officials accountable. Exposing the full truth about them-the good and the bad-ultimately makes for better-educated voters and a stronger democracy." Stephen Marks in Politics Magazine.